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Trends & Analysis
News

PepsiCo’s shares spike as results top estimates

News

Oil prices surge to highest since late September

News

Gold breaks above $4000. What’s next?

News

Big tech announces huge deals, AI boom drives shares

News

Gold surges past $3,950 to hit record high

News

Dow Jones, S&P 500 soar to record closing highs

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Central bank definition

A central bank is a financial institution that manages a country’s currency issuance, money supply, and banking system. It is responsible for implementing monetary policies to promote economic stability and growth, and central banks can utilise several tools such as interest rate adjustments, quantitative easing, and open market operations to achieve their objectives. Their decisions can influence the value of a country’s currency, as well as the cost of borrowing and lending.

In times of financial crises, central banks can also act as lenders to provide liquidity to the financial system or intervene in financial markets by buying or selling assets such as government bonds, stocks, and foreign currencies. This can help financial systems maintain stability.

 

The role of central banks in the forex market

Central banks play a significant role in shaping the forex market. They are responsible for managing the money supply of their respective countries and regions, which means their actions can have a big impact on the value of the currencies they issue.

If a central bank decides to increase interest rates, it can make its currency more attractive to investors. This may increase global demand for the currency, which may lead to an appreciation of its value. Conversely, if the central bank decides to decrease interest rates, it can make the currency less attractive to investors. This may decrease the global demand for the currency, which may lead to a depreciation of its value.

As one of the most important participants in the forex market, central banks can also directly intervene by buying or selling their own currencies to influence their value. This is typically done in extreme cases to counteract the effects of other economic factors, such as political instability.

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ADS Securities LLC – S.P.C (“ADSS”) is authorised and regulated by the Securities and Commodities Authority (“SCA”) in the United Arab Emirates under First Category: Dealing in Securities and Fifth category: Arrangement and advice (Introduction). ADSS is a Limited Liability Company – Sole Proprietorship Company incorporated under United Arab Emirates law. The company is registered with the Department of Economic Development of Abu Dhabi (No. 1190047) and has its principal place of business at 8th Floor, CI Tower, Corniche Road, P.O. Box 93894, Abu Dhabi, United Arab Emirates.

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ADSS is an execution only service provider and does not provide advice. ADSS may publish general market commentary from time to time. Where it does, the material published does not constitute advice, or a solicitation, or a recommendation to a transaction in any financial instrument. ADSS accepts no responsibility for any use of the content presented and any consequences of that use. No representation or warranty is given as to the completeness of this information. Anyone acting on the information provided does so at their own risk.